Employer Delaying PF Benefits: Is It Legal to Sign a New Appointment Letter Now?

I am working in a 5-year-old company. I have been asking the employer to provide PF benefits for the past 2 years, but they keep saying they will provide it later. Now, they are ready to start PF contributions, but they are asking all employees to sign a fresh, currently dated appointment letter. What does the law say regarding this situation?

PF Rules and Appointment Orders

PF rules state that contributions should begin from day one. This is why they are issuing the current appointment orders for proof. If the inspector comes and checks the attendance, your company will be in trouble. They may remove the attendance records; even then, salary payments could have been reflected in the accounting statement of the company. In such a case, they cannot escape accountability.

I am working in a 5-year-old company. I have been asking the employer to provide PF benefits for 2 years, but they say they will provide them later. Now they are ready to start PF, but they want all employees to sign a fresh, currently dated appointment letter. What does the law say?

PF Compliance for Companies with More Than 20 Employees

In case the company has more than 20 employees, the Act is applicable from the date it employed 20 or more employees. In that situation, PF authorities will check all employment details and ensure that all eligible employees are made members from due dates and that contributions are deposited. In this case, even a fresh employment letter will not help the establishment, as earlier documents will have to be shown to the PF authorities on inspection. One can make a representation/complaint to the RPFC.

CHANDOK
RPFC (Retd.)
[Phone Number Removed For Privacy Reasons]

Legal Position on PF Contributions

The legal position is very clear, i.e., PF contributions are to be deducted and deposited statutorily up to a maximum of Rs. 6500. Beyond this limit, it is to be mutually agreed upon by the employer and employee, subject to acceptance/approval of RPFC.

The problem related to basic wages arises only when the employer splits up the wages just to keep the wages below 6500, just to limit his own share of contribution at the minimum level. For this reason only, the controversy has occurred.

The Honorable Supreme Court of India has decided various items to be or not to be part of basic wages. These are available in most of the textbooks on EPF & MP Act 1952.

Regards,
Adv. CHANDOK Ex RPFC

As per the provisions of the EPF & MP Act 1952, an establishment employing 20 or more employees is required to register under the EPF and enroll all the eligible employees drawing a salary of Rs. 6500/- per month (inclusive of basic and DA).

You have not stated how many employees your employer had when you joined or whether the establishment was covered under EPF when you joined. If it was covered under the EPF Act and you were not enrolled as a member, you can make a complaint to the concerned RPFC of the Sub-Regional/Regional office of EPFO.

Regards,
RL Dhingra, Advocate, Labour Law Consultant, Delhi [Phone Number Removed For Privacy Reasons] [Email Removed For Privacy Reasons]